If you’re reading this, it’s probably because you’ve just won the jackpot in a South African lottery. Congratulations! But now that the initial joy of winning has worn off, you might be wondering how much taxes will be taken from your winnings. Here’s what you need to know about Lotto tax rates in South Africa:
What are the Lotto tax rates in South Africa?
It’s important to know how much of your lottery winnings you can expect to get back.
In South Africa, you will be taxed at the following rates:
- 30% on the first R120 000 (about $9200) of taxable income. This is called the marginal tax rate and applies only to an individual’s first R120k in taxable income.
- 26% on taxable income between R120 001 and R250 000 (about $9300 – $194000). The next bracket goes up by 2% per additional R20k of taxable income so that someone earning R152 000 would pay 28%, while someone earning R175 000 would pay 30%. These brackets apply until a total of R462 500 in each year has been reached; then any further earnings are taxed at 33%. These brackets do not account for any deductions or credits that may apply.
How much tax is withheld from Lotto winnings?
- Tax rates
In South Africa, the tax rate for individuals is progressive. That means that the higher your income, the higher your tax bracket and the more you will pay in taxes. In 2018/19, there are four different tax brackets:
- 0% for those who earn under R190 000 per year
- 18% for those who earn between R190 000 and R400 000 per year
- 31% for those who earn between R400 001 and R500 000 per year (this is also known as marginal tax)
- 36% on any amount above this
How to avoid paying Lotto taxes?
There are two things you can do to avoid paying Lotto taxes:
- Keep records of your winnings. If you win the lottery, it may be tempting to withdraw all of your money and put it in a savings account. However, this will make it harder for you to prove how much money was won if there is an audit. So keep track of where every cent goes. This way, when someone comes asking questions about how much was won and where it went, they’ll know exactly where their money went too! It’s also important that if any taxes were paid during this time period (which they probably were), then those records should also be kept as well so that they can be referenced at any given time by anyone who needs them.”
Even though you will not have to pay any taxes directly on your lottery winnings, it’s still a good idea to keep records of them. You might want to keep records for tax purposes or legal reasons, or you may want to keep them for financial reasons. Or maybe you just want a record of how much money you won because it’s a big moment in your life!
